How to Negotiate a Fair Property Management Cost

A property owner and their chosen property management company should work together like a partnership, in a win-win arrangement that keeps all parties satisfied. This can be achieved with clear communication, setting expectations, and negotiating fair property management fees. You want a property manager that’s engaged and motivated to keep your property occupied, and who cares about maintaining the property in good shape.

DSC00540 editWith property management services, as with most things in life, you get what you pay for: when management companies charge way less than the norm, you should really ask yourself why that is. While some property management companies charge a monthly management fee, other property managers charge a separate fee for everything – consider how hands-on you want to be, and if a pick-and-choose or a more inclusive rate is the way to go for you. Good property management services will give you options to tailor the service (and the property management cost) to your property and your needs.

Something you must negotiate clearly upfront when hiring a property manager is whether they will get paid by rent collected or rent due. You definitely want it to be “rent collected”, otherwise you may end up paying out of pocket for the management of a vacant property, while the manager has no real incentive to get it occupied since they are making money anyway. 

Standard practice for setting property management cost

The basic industry practice is to charge a percentage of the monthly rent for basic property management services, with expenses, repairs, and special issue fees added to it. You may expect to pay 8-12% of monthly rent in exchange for standard property management services, while repairs, seasonal maintenance, vacancies, and evictions are charged separately. 

Some property managers prefer to charge a monthly flat rate, with everything else a-la-carte. You must decide how hands-on you want to be and which payment scheme works best for you. 

Here are some factors that will influence how much you can expect to pay for the management of your investment property. 

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Factors that affect your property management cost

Type of Property

Residential property management is very different from managing commercial property, and managing single-family homes takes more effort than managing several units in the same condo or building. While residential management is more involved, since your tenants live there and will have questions, issues, and emergencies at all times; commercial property management must be carried out with the utmost professionalism, since these customers pay significantly more and tend to stay much longer.


Remote properties are likely to incur extra fees, because the property manager will have to travel to show them, inspect them, and get a local team going for cleaning and repairs.

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Special Services 

Besides the day-to-day management of a property, there are several special instances that bring their own challenges and add to your bill. Let’s look into them one by one.

Vacant property

An unoccupied property will incur several charges (or one flat rate, depending on how your management company works). A vacancy fee is usually charged to cover staging, marketing, and showing costs to bring tenants into your property. A separate tenant screening fee may be charged, or it can be included – ask and get on paper which one it is.

Some managers charge a finders’ fee for getting a tenant to sign a 1-year or longer lease, which usually is the equivalent of 50% of one month’s rent. Any of these are good options to get an empty property rented – just make sure you are not being charged all of them at the same time.

Maintenance and Repairs

Property management companies usually have their team of contractors and cleaners, and offer full maintenance packages. Get a clear list of what services are included, and especially of which repairs and issues will incur an extra cost for you. Decide whether you want to authorize every single repair or only those above a certain value.

Many owners and managers agree to have a set amount put aside for emergency repairs, so you don’t have to authorize an urgent repair in the middle of your vacation. This should be communicated clearly and agreed beforehand.


In the unlikely and unpleasant situation of needing to get a tenant out of your property, a property manager can handle the legal process for you – for a price. Typically these services cost $300-500 per eviction; remember to ask your property manager how they handle these and what they charge for them.

Other factors

Depending on the type of property, there will be many other factors that can affect how much you pay (and earn). Consider vending machines and washer/dryer income if your building has either of those – who will collect the money? How often will it be forwarded to you? What is the cost of this?

Pet deposit fees are another aspect to consider, especially for residential properties. Who keeps them, and when do they get deployed to make repairs?

Don’t be afraid to ask questions and communicate clearly with your property manager until you reach an agreement that is mutually beneficial.

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